By Tom Adams, Financial Post
Dwight Duncan, now Ontario’s Finance Minister, told the legislature in 2004: “It would be irresponsible for the province and taxpayers to continue to subsidize electricity consumption, because it jeopardizes our ability to invest in health care and education. This is simply not sustainable, nor is it acceptable. The people of this province deserve better.” He committed to “take the politics and politicians out of electricity pricing.”
Where is the Dwight Duncan of 2004?
Then, with the deficit at $5.6-billion, he said it was unacceptable for taxpayers to shoulder a portion of the cost of electricity.
Today, with the deficit at $18.7-billion, he engineers techniques to split the bill for the McGuinty government’s careless, profligate electricity policies between staggering power rate increases today and enduring pain for tomorrow’s taxpayers.
Duncan’s new electricity plans are riddled with contradictions. He claims that the government’s new long-term electricity plan will lead to “stable and predictable pricing.” Yet, in his own statement, he admits that: “Over the next five years, however, residential electricity prices are expected to rise by 46%, which is an average annual rate of about 7.9%.”
When McGuinty’s government introduced its Green Energy Act last year, enshrining sole-sourcing of power contracts in law, it promised that the rate impact would be limited to 1% per year. Then energy minister George Smitherman told the Toronto Star: “I have been very clear about it. One per cent per year, incremental of a person’s electricity bill, with corresponding capability through investments in conservation for people to lessen their use of electricity.”
One glimmer of truthfulness in the Economic Statement is the admission that renewable power generation is the main driver for the rate increases. This admission contradicts the recent surge of denials from government and renewable energy apologists. Ontario’s Environmental Commissioner, Gordon Miller, for example, has been on a speaking tour pleading with electricity executives to convince consumers that rates are stable.
Applying the government’s estimates, by 2015 the cost of sole-sourced green energy contracts above the market value of the power will exceed $4-billion per year.
Slavishly, Duncan cleaves to Premier McGuinty’s propaganda slogan that the “Green Energy Act will create 50,000 new jobs in three years.” The employment losses galloping electricity cost increases have and will cause are ignored.
Duncan’s retreat from truth and principle grows with his explanation for how the public will pay for his blatant vote-buying scheme. Next year, the government claims the “benefit” will cost $1.1-billion. Until this corrosive shell game is killed, the taxpayer hit will follow skyrocketing electricity costs.
Notwithstanding record deficits, the cost can be accommodated due to what Duncan calls the McGuinty government’s record of “prudent management of finances.” Duncan claims that provincial income from Crown-owned Ontario Power Generation (OPG) and Hydro One are projected to match the cost of the rebate. Duncan ignores previous decisions pledging all of OPG’s and Hydro One’s profits to servicing debts left by the former Ontario Hydro. Shifting funds from servicing Ontario Hydro debts to paying for rebates would only work if Duncan could magically spend dollars twice.
With little hope that even very aggressive actions by a new government and an economic rebound better than any current forecasts can get the Ontario government out of deficit any time over the next five years, all of the costs for the “benefit” plan will be borrowed, to be repaid in the distant future.
McGuinty’s Green Energy Act, passed last year, erased more than a century of electricity policy consensus based on the idea that the purpose of the power system, irrespective of policy instruments used, was to serve consumers. Now the purpose of the power system is to achieve green economic and social transformation.
Duncan’s Economic Statement breaks from our traditions more profoundly. Historically, a fairly solid wall separated electricity sector financial flows from provincial governmental finances. This compartmentalization provided some tenuous measure of transparency, accountability and independence for the power system from political meddling. Now the financial flows of the electricity system are deeply embedded in the government’s daily financial life.
McGuinty claimed his electricity policies, enshrined in the Green Energy Act, would benefit future generations. Although our bills are skyrocketing, Duncan has signed an additional blank cheque payable by our kids to fund irresponsible green initiatives. Duncan has polluted the power system with unprecedented political meddling and created a whole new class of taxpayer liability.
Tom Adams is a Toronto-based energy consultant.